Title: “An investigation on the centrality of e-Entrepreneurship over conventional Brick- &-Mortar concept.”

Author:

Mr. Amit Arya

Faculty

BBA Department

Dhanwate National College, Nagpur

Email Id: mailtoamitarya@gmail.com

Co-Author:

Dr. Preeti R. Gotmare

Post Doctoral Fellow

PGTD, Department of Commerce

RTM Nagpur University, Nagpur

Email Id: preeti.r.gotmare@gmail.com

 Keywords: e-Business, e-Entrepreneurship, e-Commerce, Brick & Mortar entrepreneurs.

Abstract: Most of the literature on entrepreneurship relates to the traditional "brick-and-mortar" type. A review of contemporary research in entrepreneurship literature suggests that online entrepreneurs are different from regular or "brick-and-mortar" entrepreneurs. This paper attempts to collate all variables used in prior research to describe entrepreneurs and their ventures into a comprehensive framework. This investigation considers four major aspects of entrepreneurship: characteristics of individuals starting the venture; technology used in the venture; the environment in which the venture operates and the process by which the venture is created. Such an investigation can provide useful insights into the process of online entrepreneurship by showing it to be a complex, multi-factor phenomenon.

Introduction:

E-entrepreneurship describes entrepreneurship in e-business. The e-dimension of entrepreneurship incorporates all the key elements of entrepreneurship including risk-taking, proactivity, and innovation in building, running and managing e-business. The concept of e entrepreneurship is not limited to small e-businesses but includes corporate e-intrapreneurship which is embedded in establishing e infrastructure to do e-business in large organizations. E-business operates in a fast-moving, highly uncertain, unknowable and unpredictable context, and as such entrepreneurship in e-business by necessity exceeds the traditional concepts of entrepreneurship.

For example, the traditional notion of entrepreneurship of being or becoming an expert or finding and protecting a unique knowledge in a niche market, clashes with the fact that e-business knowledge is often short-lived and available to everyone, anytime, and anywhere (Steinberg, 2003, 2004).

Current research in entrepreneurship tends to focus on or prove the notion that entrepreneurs are different from non-entrepreneurs (1) or that entrepreneurial firms are different from non-entrepreneurial firms (2). In these studies, the basic assumption is that all entrepreneurs and their new ventures are homogenous. The focus of this paper is on differences between brick-and-mortar entrepreneurs and entrepreneurs who conduct ventures completely online. Differences between these two may be greater than the differences between entrepreneurs and non-entrepreneurs and those between entrepreneurial firms and non-entrepreneurial firms, as discovered in the studies mentioned earlier. Once we identify and recognize that online entrepreneurs are different from regular entrepreneurs, it becomes necessary to find a way to classify those online ventures.

The meaning of entrepreneurship and its measurement has been discussed in several studies. (3) Determinants of entrepreneurship have been the focus of several studies covering a wide range of theories and explanations (Brock and Evans, 1989; Gavron, Cowling, Holtham and Westall, 1998; OECD, 1998; Blanchflower, 2000, 2004; Verheul, Wennekers and Thurik, 2002; Arenius and Minniti, 2005). Entrepreneurship has been found to be a significant factor in economic development of countries ((Baumol, 1990; Wennekers and Thurik, 1999; Carree and Thurik, 2003, 2006; Acs et al., 2005). The extent of entrepreneurship has been found to vary systematically across countries and across time (Rees and Shah, 1986; Wit and Van Winden, 1989; Blanchflower and Meyer, 1994; Blanchflower, 2000, 2004). However, similar research on "online entrepreneurship" is sparse, even though the coverage of "online" entrepreneurship is truly global.

Interest in international entrepreneurship has increased rapidly over the past decade (Brush, 1993, 1995; Hitt and Bartkus, 1997; Hisrich et al., 1995). Scholars have observed the close theoretical link between entrepreneurship and international business (IB) research (Hisrich et al., 1994; McDougall and Oviatt, 2000). However, a conceptual framework for analyzing "online entrepreneurship" has yet to be developed formally in the field of online entrepreneurship. It is this gap that this paper purports to fill.

The conceptual framework that is developed in this paper will provide a way of analyzing past research studies. Each study can be broken down into types of individuals, organizations, environment of internet and processes that were studied. This paper will not seek to answer questions such as how online ventures are started or provide theoretical models of online entrepreneurship. Instead, it will provide a different perspective on the online entrepreneur; a shift that will emphasize the complexities and variations involved in online entrepreneurship.

The goal of coming up with a framework is not to smooth differences between brick-&-mortar entrepreneurship and online entrepreneurship and come up with typical properties of a typical entrepreneur. The goal is to identify specific variables that describe how online entrepreneurship is created, in order that meaningful contrasts and comparisons among new ventures can be made.

Growth of Online Entrepreneurship:

The internet-based commerce has been stealing billions of dollars away from traditional retail outlets, and is becoming a significant component of global sales of a growing enterprise. Once we acknowledge that online entrepreneurship is becoming more and more significant in today's business world, it then becomes necessary to find a framework for systematically discovering and evaluating the similarities and differences among new online ventures. The population of entrepreneurs may be homogenous but the subset of "online" entrepreneurs within the entrepreneurial universe must be further analyzed so that entrepreneurial research can produce meaningful results. A primary value of such a framework for describing online entrepreneurship presented here is that it provides a systematic means of comparing and contrasting brick-and-mortar ventures with online ventures. In addition, it provides a way to conceptualize variation and complexity in entrepreneurship (Gartner, 1985).

Existing frameworks of entrepreneurship consider variables such as country effects, role of government intervention, supply of resources and willingness of entrepreneurs. One such framework was developed by Morris & Kuratko (2002) (see Figure 1) in which they compared the entrepreneurial changes taking place in different phases.

Fig: 1

They empirically tested this framework and discovered that factors such as lack of financial support and perceived administrative bureaucracies at government levels did not influence levels of motivation. Another conceptual framework of entrepreneurship went deeper by distinguishing itself from domestic entrepreneurship.

Fig: 2

The organizational factors include the top management team and other assets available to the organization. In this framework, strategic and environmental factors are considered as moderators of the relationship between organizational factors and international entrepreneurship dimensions. The benefits of going international by an entrepreneur are described under competitive advantages in the form of financial and non-financial outcomes.

Fig: 3

The two frameworks of entrepreneurship described above consider entrepreneurship as a culmination of several forces. They distinguish between domestic and international entrepreneurship. These frameworks are woefully inadequate in explaining factors that lead entrepreneurs to go online, as opposed to going international.

To illustrate how these two frameworks are inadequate, consider the case of an online business such as eharmony.com. Dr. Neil Clark Warren, a renowned relationship expert and author of several books, started this firm in 1999. Within two years of its formation, this firm was profitable and, in 2003, the chairman received the Entrepreneur of the Year Award from Ernst and Young. Existing frameworks on entrepreneurship would focus on factors such as government influences, management characteristics and strategic factors, but would minimize or ignore the use of technology in the success of the entrepreneurship venture. In the case of eharmony.com, it was the convenience, anonymity and provision of a unique matchmaking service that led to its success. It is in this light that we develop a framework for explaining online entrepreneurship.

An Investigation:

The word "entrepreneur" has been defined in various ways and it has been a semantic problem in the study of entrepreneurship ((Brockhaus (1980); Komives (1969); Long (1983)). It is necessary to define "online entrepreneur" clearly so that the complexity and variation of that concept is clearly identified. For our purposes, we will define online entrepreneurship to mean any venture conducted solely on the internet or the World Wide Web. It encompasses activities of a regular entrepreneur, but the mode of operation is technologically based. It recognizes that online entrepreneurship has distinct characteristics than typical entrepreneurship. These distinct characteristics themselves lead to different and complex problems faced by an online entrepreneur. For example, the problem of security within an online transaction is very different from that in a regular, brick-and-mortar retail operation. The concept of taking a "test drive" of a product may be completely absent when dealing with an online site, unless that site is offering a "demo" version of a piece of software that can be easily downloaded and used.

The classification of entrepreneurs for the purpose of understanding the concept of entrepreneurship has been extensively researched (e.g. see Danhoff (1949), Cole (1959), Daily (1971), Smith (1967), Filley and Aldag (1980), Vesper (1979, 1980), Cooper (1979), Cooper and Dunkelberg (1981)).

A framework for describing the concept of online entrepreneurship is similar to Gartner's (1985) framework of understanding new venture creation, but has been modified to include the "online" nature of the venture. The "individual" is the entrepreneur who started this venture and the "organization" is the form of the venture. The World Wide Web is the environment in which the entrepreneur operates and the process is the detailed steps the entrepreneur undertakes to perform in the venture.

Fig: 4

Individual:

The attributes of an individual who starts a new venture have been extensively studied in traditional entrepreneurship literature. Those characteristics typically apply to an entrepreneur starting a venture in the real world, as opposed to an online world. For an online venture, an individual needs to possess different skills. The requirement of being a team player, as mentioned in Cooper (1979), may not be relevant for a one-man-based online business that is selling items on, for example, eBay. Other requirements--propensity to take risk, age, previous work experience, entrepreneurial parents, etc.--that are extensively studied in entrepreneurship literature may not be appropriate to be successful in an online environment. A good knowledge of basic HTML language, or electronic payments, or shopping cart software may be more appropriate for an individual undertaking an online venture, though such technical knowledge may not be relevant nowadays considering one can buy or download off-the-shelf software solutions. In the framework that has been developed, we consider the desire to use technology as a primary driver of business or "tech-savvies" to be an important variable influencing the success of an online venture. Other factors such as interpersonal skills, presence of a foreign accent, and location of the venture may lose importance in an online setting where the sole proprietor-entrepreneur is the only key player, though such factors could be very important in a traditional business setting. However, these factors do become more important as organization structures become more complex, such as partnerships, corporations and other forms. In such cases of complex organization structures, we can replace the "individual" with "management personnel."

World Wide Web:

Most transactions in an online business venture occur through the internet (in our study, it is synonymous with the World Wide Web or cyberspace). Payment and delivery may occur through traditional means, such as use of delivery services, checks and money orders, but orders are typically initiated on the venture's website. Information about products and services are made available through the site, which acts as a storefront for the business. The barriers to entry and exit are minimal in the online world, thereby making it easy for competitors to step in and take customers of an online business away. It also forces an online entrepreneur to be creative in how he or she sets up the storefront, what terms are offered, how to select a domain name, and what kind of advertising medium to use. In the arena of online entrepreneurship, there is a scarcity of research on environmental variables, though there are several studies (Bruno and Tyabjee (1982); Williamson (1975), etc.) detailing environmental variables that stimulate entrepreneurship.

Organization:

Most of the studies in entrepreneurship focus on manufacturing firms (Smith (1967); Cooper (1970), Collins and Moore (1977)). Litzinger (1965) used motel firms in his sample. Researchers in these studies have shown no distinction between the type of entrepreneurial firms in their studies, thereby making it difficult to apply their conclusions across all industries and for online firms. Many online businesses are set up as sole proprietorships or partnerships, though the larger online firms are set up as corporations. The evolution of the online firm depends heavily on factors such as "eyeballs attracted" or "revenues generated." The exit strategy for successful online firms is either to offer capital to the general investing public in an Initial Public Offering (IPO) or to be sold to an existing corporation, with the founders of the business continuing to work for the venture they founded. In this respect, an online entrepreneur may choose to have a professional team of managers installed in his organization or to just operate the firm as a sole proprietor.

In recent times we have witnessed a series joint ventures and strategic alliances between cross-border online corporations shaking hands to have an exchange of technological priorities, production factors like land and labour and most importantly creating a new market base and hold it even stronger.

Process:

The "process" portion of traditional entrepreneurship studies relates a series of steps that an entrepreneur needs to perform to be successful. In the online setup, the process aspect of entrepreneurship involves performing a different series of steps. Gartner (1985) summarizes the process of entrepreneurship into six common behaviours: deciding on a location, accumulation of resources, marketing of products, production activities, setting up of an organization and responding to government and society. Some of the behaviours are applicable to an online entrepreneur (accumulation of resources, marketing, organizing and responding to external environment). However, one can add the following new behaviours to this list for an online entrepreneur: securing the online transaction process, indulging in search engine optimization, safeguarding privacy, and protecting online assets. The process of online entrepreneurship is closely tied to the hardware and software used in the venture. Constant updating and upgrading of these tools is key in an online setting, although assets like land and building are not upgraded as often in the traditional business environment.

Conclusions:

Separate listing key variables involved in a successful online venture under the appropriate dimension of the conceptual framework demonstrates the complexity of the online entrepreneurship. These key variables are very different from those used in studies of traditional entrepreneurship models. Earlier studies on entrepreneurship fail to differentiate the needs of the online entrepreneur from those of regular entrepreneurs or even non-entrepreneurs. An online entrepreneur selling, for example, coffee operates in a very different environment when compared with the environment of a coffee shop owner. By lumping these two entrepreneurs together in traditional entrepreneurship studies, we fail to see that generalizations about entrepreneurs cannot easily be carried over to online entrepreneurs. The conceptual framework presented in this paper provides a way of analyzing entrepreneurship in the online environment by clearly identifying relevant variables. Any new research in online entrepreneurship can then be designed to account for the unique traits of online entrepreneurship. Another benefit of using the conceptual framework pertains to resolution of conflicts noticed in earlier entrepreneurship studies. For instance, Collins and Moore (1970) and Cooper (1970) come up with different traits that are required for a successful entrepreneur, but these studies failed to look at the quality of their data. Collins and Moore (1970) looked at manufacturing firms whereas Cooper (1970) studies high technology firms.

The framework developed in this paper can be used as a basis for future research in online entrepreneurship and for reporting results from such studies. Assuming the sample will consist of only online entrepreneurial firms, the researcher can study each of the four dimensions and compare results with other researchers on the same dimensions. For instance, a researcher may ask: Is there any difference in age, work experience and educational backgrounds between entrepreneurs who have storefronts on Amazon versus Yahoo? Are business-to-business (B2B) stores different from business-to-government (B2G) stores on any of the four dimensions of the framework? Is the process of starting an online retail site different from an online dating site? Online ventures that share meaningful similarities across the four dimensions can be classified and described together, resulting in useful generalizations.

The fast growth and business success of companies such as eBay, Amazon.com, travel.com and priceline.com, along with the bankruptcy of numerous dotcom firms worldwide in 2000 hold potent management implications for IT innovation and entrepreneurial organizations worldwide. As such, e-entrepreneurship and e-innovation have become emerging disciplines for proactively responding to changes in the e-business world.

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Prakash L Dheeriya, Department of Finance, California State University-Dominguez Hills, Carson

(1.) See Brockhaus, 1980; Carland et al., 1984; Collins and Moore, 1964; DeCarlo and Lyons, 1979; Hornaday and Aboud, 1971; Howell, 1972; Komives, 1972; Litzinger, 1965; McClelland, 1961; McClelland and Winter, 1969; Palmer, 1971; Schrier, 1975; Shapiro, 1975.

(2.) See Collins and Moore, 1970; Cooper, 1979; Smith, 1967; Thorne and Ball, 1981.

(3.) See Hebert and Link, 1982; Bull and Willard, 1993; Lumpkin and Dess, 1996; OECD, 1998; Praag, 1999.

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